Understanding the factors associated with functional deficits experienced by people with schizophrenia is essential for identifying interventions that can support independent living for these individuals. One promising line of work has examined the cognitive factors that may interfere with successful functional outcomes (Green, 1996). Despite this accumulating evidence that cognitive deficits in schizophrenia are related to functional outcome, findings have been shown to have limited utility in rehabilitative interventions. Green and colleagues (2000) have suggested that rather than focusing only on specific cognitive processes, research in this area should examine the broader concept of learning potential, which may be an important factor in the acquisition and performance of life skills. Broadly defined, learning potential is the ability to attain cognitive skills and to employ those skills in the appropriate situations to solve some problem (Sternberg & Grigorenko, 2002). Learning potential is measured with dynamic assessment methods, which combine mediated instruction with test administration. The extent to which an individual can take advantage of the instruction to improve performance is taken as an index of learning potential. A number of authors have argued that learning potential is a better indicator of cognitive ability than scores on static performance tests (Campione & Brown, 1987; Hamers & Sitjsma, 1995; Sternberg & Grigorenko, 2002, Tzuriel, 2000). In the proposed project, individuals with schizophrenia will be evaluated in terms of static cognitive ability, their learning potential and their functional skill ability in the domain of grocery shopping. Analyses will determine whether learning potential predicts functional skill performance over and above the prediction based on static cognitive measures alone. We will also determine whether different domains of learning potential predict different specific aspects of grocery shopping. The immediate goal of this work is to better understand the relation between domains of learning potential and functional outcome; the long term goal is to use this information to produce rehabilitative interventions that better support successful community living for people with schizophrenia.